Casinos, Illinois Gaming Board fight fantasy sports measure

An amended bill that would legalize and regulate fantasy sports in Illinois is one step closer to becoming law, despite strong opposition from other gambling stakeholders and the Illinois Gaming Board.

In a 9-4 vote following heated testimony and concerns that the bill was being rushed, the House Criminal Law Committee today sent House Bill 4323, known as the Fantasy Contests Act, to the House floor.

State lawmakers in the House could vote on the bill, authored by Rep. Mike Zalewski, D-Riverside, as soon as tomorrow, but committee members today said it still needs major changes before becoming law.

"Constituents of ours play these games regardless of whether we agree with their decision to do so," Zalewski testified today in Springfield. "This is an opportunity to create a safe place for these games to occur. We have an opportunity to pass one of the most comprehensive daily fantasy sports laws in the country."

Zalewski filed a major amendment to his bill yesterday, adding regulatory guidelines, a license fee and tax structure to the original proposal he introduced last year.

LIMITS AND OVERSIGHT

Under the revised bill, fantasy sports games run by operators like New York-based FanDuel and Boston-based DraftKings would be regulated by the Illinois Gaming Board, the government body that oversees the state's casino and video gambling operators. Other rules addressing who can play, how often they can play and limits on betting were also part of the new bill.

But opposition to those proposed guidelines was staunch from the Illinois Gaming Board itself. The agency, which would be charged with overseeing the industry if the bill is passed, expressed doubts about its capacity to do so.

Fantasy sports "puts gaming into people's homes," said gaming board legislative liaison Caleb Melamed during his testimony before the committee, pointing to protections that casino and video gambling operators can put in place to ensure residents under age 21 aren't playing their games. "We don't see a way to prevent teenagers or children even younger from getting their parents' account numbers and using the internet to game."

That sentiment was echoed by committee members from both sides of the aisle.

Rep. Scott Drury, D-Highwood, scolded his colleagues for what he called a rushed process to move the bill through committee, highlighting concerns about how the gaming board could guarantee that minors aren't playing.

"The bill accomplishes very little. The requirements in there are much ado about nothing," he said. "We're opening the door to legitimizing gambling for minors, causing a huge social impact down the road."

State Rep. Ron Sandack, R-Downers Grove, voted against the bill because it would allow companies like FanDuel and DraftKings—which are currently violating Illinois law, according to Attorney General Lisa Madigan—to continue operating while the Illinois Gaming Board vets them.

"It is an important bill, and big enough and important enough to do right. We are not doing the committee process right by a truncated hearing," said Sandack. "This bill is not ready for prime time."

FANTASY SPORTS COMPANIES' SUPPORT

Big fantasy sports operators, meanwhile, spoke on behalf of the proposal, highlighting the interest in the industry from an estimated 2 million players statewide. "It's a bill that's going to help us thrive and continue to operate in Illinois," said Peter Schoenke, president of the Fantasy Sports Trade Association, which represents some of the industry's largest game operators.

“This bill reflects thoughtful and appropriate regulation for an industry valued by more than 2 million people in Illinois who participate in fantasy sports contests. The level of consumer protections are among the safest in the country and the revenue model for the state is viable for operators both large and small," Schoenke said in a statement after the committee vote.

One unsurprising opponent of the bill was Midwest Gaming & Entertainment, which owns Rivers Casino in Des Plaines.

Paul Gaynor, who now serves as the company's legal counsel and who previously spent 10 years as a senior staff member in the Illinois attorney general's office, argued that daily fantasy sports is no different than illegal internet gambling. Just as onerous about the bill, he said, was that it would create an uneven regulatory playing field with casinos.

"My client is a lawfully abiding corporate citizen in the state of Illinois that is being penalized by allowing bad actors to perpetuate their conduct and be rewarded," he said.

Illinois is one of many states considering bills to legalize and regulate fantasy sports in the wake of astronomical growth in the popularity of FanDuel and DraftKings.

Other states have taken action to legalize or shoot down daily fantasy sports in recent months. More than a dozen states have bills under consideration, while two states—Virginia and Indiana—have signed daily fantasy sports bills into law.

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